11 Best Quality Penny Stocks to Buy According to Hedge Funds

4. Melco Resorts & Entertainment Limited (NASDAQ:MLCO)

Revenue CAGR in the last 5 years: 23.24%

Net profit margin: 0.94%

Number of Hedge Fund Holders: 27

​​​Melco Resorts & Entertainment Limited (NASDAQ:MLCO) is a Hong Kong-based developer, owner, and operator of integrated resort facilities with a focus on casino, gaming, and entertainment. The company is known for operating major properties across Europe and Asia, with the most notorious ones including City of Dreams and Studio City in Macau, City of Dreams Manila in the Philippines, and City of Dreams Mediterranean in Cyprus. A significant competitive advantage of the company is the exclusive casino license in Cyprus, which it holds for 15 years. MLCO ranked 1st on our recent list of 12 Best Hotel Stocks To Buy According to Analysts.

Melco Resorts & Entertainment Limited (NASDAQ:MLCO) demonstrated strong momentum in late 2024 and early 2025, with market share growing month-to-month in Q4 2024, reaching approximately 15.6% in December, while property visitation exceeded pre-pandemic levels for the first time since border reopening. The company had a successful Chinese New Year period, with total gross gaming revenue outpacing both 2024 and 2019 levels and property visitation up 17% compared to the previous year. January 2025 was particularly strong, being one of the best January performances in recent years, with continued momentum into February showing stronger performance than the prior year across both weekdays and weekends.

Melco Resorts & Entertainment Limited (NASDAQ:MLCO) is actively pursuing an asset-light strategy, as evidenced by the announcement to explore strategic alternatives for the City of Dreams Manila. This strategic shift aims to enhance financial flexibility, strengthen the balance sheet, and support long-term growth initiatives. On the operational front, MLCO maintains a strong liquidity position with $3.3 billion in available liquidity, including consolidated cash on hand of approximately $1.3 billion. The company is also implementing cost optimization measures, with expectations to reduce daily operating expenses from $3.2 million in Q4 2024 to approximately $3.0 million by the end of Q2 2025. With that being said, MLCO has demonstrated exceptional operational execution and is investing in its expansion. With at least 27 hedge funds owning the stock, we included MLCO in 4th place on our list of the best quality penny stocks to buy according to hedge funds.